Nursing Homes Face Rising Standards, Expenses

By Watkins, Robert | THE JOURNAL RECORD, December 21, 1988 | Go to article overview

Nursing Homes Face Rising Standards, Expenses


Watkins, Robert, THE JOURNAL RECORD


These aren't the best of times for nursing homes in Oklahoma. Neither are they the worst, for this state has climbed from dead last in the rate of Medicaid reimbursement per patient day to rank 48th in the nation.

After a half dozen or so bankruptcies in 1986 and 1987, the legislature responded by raising Medicaid rates from $30.50 a day to $37 in all facilities. Keep in mind, however, that the federal government shares the burden of patient care with the state, as Medicaid law requires, and puts up at least 50 percent of the money to reimburse nursing home operators.

To Bruce Thevenot, executive director of the Oklahoma Nursing Home Association (ONHA), and the people his organization represents, the legislature's seeming generosity was heaven-sent. Still, big troubles persist.

Medicaid continues to be a drag, especially on profit-centered facilities. And 70 percent of all nursing home beds are owned by for-profit companies.

According to data collected by the federal Health Care Financing Administration (HCFA), the average daily payment for a patient in a skilled facility was $52 in 1985. The government has no later figures, but it is believed that payments have risen by an average of 4 percent a year. Labor costs, however, have gone up 11 percent a year.

Paul R. Willging, executive director of the American Health Care Association (AHCA), the trade organization representing nearly 10,000 nursing homes, voices a pessimistic outlook:

"This is an industry in crisis. And it's going to have problems as long as it's driven by Medicaid rates."

Even the industry's giants are struggling. Case in point: Beverly Enterprises Inc., a California-based firm with 1,003 nursing homes to its name, along with $1 billion in debts. Despite revenues of more than $2 billion last year, the company lost $30.5 million.

Some experts say Beverly's management endangered the company by going on a seven-year acquisition binge. But the severest critics acknowledge that Medicaid and notoriously low reimbursements are far from blameless. …

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